Peacetime CEO thinks of the competition as other ships in a big ocean that may never engage. Wartime CEO thinks the competition is sneaking into her house and trying to kidnap her children.

Microsoft is in a war for survival. Steve Ballmer had a Wartime CEO mentality, but he never managed to turn Microsoft into a wartime company. When the internet happened, Bill Gates fired off his infamous Internet Memo and bludgeoned Netscape into submission. As this essay by software guru Joel Spolsky elucidates, contrary to common belief, the reason why Microsoft destroyed Netscape isn't anticompetitive practice--it's that Microsoft plain executed better. Meanwhile, the reason why Microsoft is nowhere in mobile isn't because the strategy or the software was bad, it's because it shipped years too late.

Ballmer was a warrior, but somehow he never managed to get the warrior spirit to seep down further below than the few top rungs of the organization. Microsoft is just so damn rich, so damn profitable, so damn dominant in its core businesses, that even when all the signs flash red, it's hard to get into a warrior spirit.

This is why Satya Nadella needs to go insane. I mean it. He should be viewed as psychopathic. Fire-people-in-the-elevator psychopathic. Humiliate-people-in-public psychopathic. Obviously it's bad for a CEO to behave in that way in most cases, but Microsoft is not in most cases. Microsoft has over 100,000 employees, and I'll bet you whatever's in my pocket that less than a hundred of them wake up every morning thinking their company is at war. If you were named chief of general staff of the French military on the eve of the 1940 Battle of France, how would you behave?

Microsoft should take a page from Amazon next door. From college hire to CEO, Amazon has only seven layers of management. Microsoft probably has, like, seventy-seven. Nadella should reduce them to 7 and fire everyone who doesn't fit, and probably a few who do. Microsoft should copy the two-pizza rule. It should ban Powerpoint--yes! Good dealers don't get high on their own supply.

You can come up with all the amazing strategies in the world, if Microsoft can't ship great products fast, it's toast, period. And that starts with revamping Microsoft's bloated, self-satisfied, bureaucratic culture.

Was it fun being at Apple in 1997 when Steve Jobs returned? Almost certainly not. Lots of pink slips, yelling and insults. And yet, I'm sure, for the right employees, it was galvanizing.

2. Complete The Shift To The Cloud (This should be easy.)

I put it here as a perfunctory matter, because Satya Nadella comes from Microsoft's enterprise division, and was the architect of the shift to the cloud of much of Microsoft software, including the highly-regarded and highly-successful Office 365. If there's someone who knows Microsoft should embrace the cloud, and knows how to do it, it's Satya Nadella. But it's still very important, so it's here.

3. Figure Out The Mobile Strategy

Microsoft has basically two choices. Continue with the current strategy, with Windows Phone 7 and Nokia, and basically try to spend as much cash as possible stuffing the channel, and advertising it, and bribing carriers to promote it and developers to code for it, and cross its fingers. It might achieve a respectable number 3 in this all-important market in a few years doing that. And if I sound like I'm dissing it, I'm not. Xbox is a roaring success today, but it was 15 years in the making.

Another idea would be to junk the mobile strategy. Fork Android (again, like Amazon did), meaning take the open-source operating system and produce a Microsoft-ified version. This would take care of the lack of apps on Microsoft's platform. Microsoft would give up trying to own the platform, and instead it would make money on services. In particular, it would become the go-to "bring your own device" company. Given its success in enterprise software, it would help corporations transition to the "enterprise consumer" world where employees choose their own devices. Employees could use Microsoft phones, or iPhones. But Microsoft software would integrate the phone with the company. From there, along with its Xbox and Skype brands, and its relationship with Facebook, Microsoft could go after the consumer market.

Speaking of Skype and Xbox, a good idea might be to put out free, cheap phones for teens with very cheap data plans (maybe as an MVNO), with free VoIP with Skype, that are all about texting and playing games. Make money on virtual goods and various other services.

In any case, Satya Nadella needs to figure out what the mobile strategy is going to be--and execute the heck out of it.

4. Build Apple TV Before Apple Does.

Apple TV already exists. Except you know it as Xbox. Everybody talks about Google and Apple's war for the living room, but Microsoft already has won it. Xbox is an amazing asset for Microsoft into the living room. Xbox should be a full living room entertainment system and suite of services, in the way Apple TV is supposed to be. Partner with Sonos and Samsung and others to make full Xbox home entertainment systems--TVs, consoles, whatever. Microsoft has the best beachhead into the living room. Now it needs to own it.

5. Expand The PC Market.

Everybody thinks the PC is doomed. No, it's not. People are always going to use PCs. In that sense, they certainly are like "trucks," in Steve Jobs's phrase. But the market is stagnating, if not declining. Part of the reason is that most people prefer small, lightweight computers, and manufacturers are unwilling to make those, preferring to hawk higher-margin products. But Microsoft needs to expand the market. The fastest-growing segment of the market is Chromebooks--that's right, the internet company has a better PC strategy than the PC company. By promoting and/or building fast, cheap, good, portable PCs, Microsoft can still expand its core PC market.

6. Build A Moon Rocket!

I'm serious. Maybe not literally a moon rocket--but then again why not.

Quick, what's the difference between Google and Microsoft?

Both are highly successful software companies that have virtual monopoly situations in extremely lucrative, albeit maturing markets. Both are showing signs of aging. The difference? Google has made it absolutely clear that it wants to boil oceans, and the sky is the limit. Android? No idea how we're going to make money from it, but mobile is important so let's spend $20 billion dollars finding out. Computer glasses? If it's the future, Google will be there. Giving the entire world free internet? Fire up the blimps. Self-driving cars? Why not!

Google has realized that, at its core, it is not a search company or an internet company or even a computing or information company. It is a giant cash pile, a brand, and tens of thousands of extremely talented people. Hence its numerous moonshot projects.

The impact on morale isn't something that should be overlooked, even though it's not the whole story. In an industry where it's all about talent, it really makes a difference to that 99.99th percentile recruit whether to go work for the company that makes self-driving cars and the one that doesn't. Also give something to balance out that CEO psychopathy.

But more than that. Microsoft is a positively gigantic company. Its brand is a bit tainted and its talent a bit drained, but these things can, once in a while, be reversed. But if it wants to truly move the needle on its business, it needs moonshots. Microsoft generates $20 billion per quarter in revenue. If it wants to grow to twice its size in ten years (not a crazy growth rate in tech), it needs to find markets worth $80 billion. By definition, any market like that is going to require moonshot projects to conquer. Meanwhile, Microsoft has $80 billion (!!) in cash on its balance sheet that it doesn't know what to do with. Microsoft needs a moonshots division to grow.